Quick Links

The Institute for Research on Poverty (IRP) at the University of Wisconsin–Madison is a center
for interdisciplinary research into the causes and consequences of poverty and inequality and the impact
of related policies and programs. As the National Poverty Research Center sponsored by the U.S. Department
of Health and Human Services, IRP coordinates the U.S. Collaborative of Poverty Centers in an integrated
set of activities with the ultimate goal of improving the effectiveness of public policies to reduce poverty
and inequality and their impacts on the well-being of the American people.

This paper uses a unique dataset, created by matching administrative data
from public assistance records, unemployment insurance records, and federal
tax returns for a sample of California residents, to study the employment effects
of the earned income tax credit (EITC). At the core of our empirical analysis
is a set of four tests that we use to assess the causal effects of the EITC
on employment.

The first test is based on the intuition that if the EITC alters employment,
all else being equal, employment rates for two-or-more child families should
grow relative to the employment rates of one-child families, as credit amounts
available to these groups of families diverged over the 1990s. The second test
examines whether or not people eligible for the EITC actually file tax returns
and claim it. The third test is based on the intuition that, if the EITC, and
not other factors such as the strong economy in the 1990s, is causing employment
differences between families with two or more children relative to those with
one child, we should expect to see no employment differences (after conditioning
on other characteristics) between families with two children and families with
three or more children, since the EITC did not change differentially for the
latter two groups. The fourth test conditions the sample on those who do not
file tax returns and again examines employment changes in the 1990s for families
with two or more children relative to families with one child.

Using fixed-effects empirical employment models estimated on a sample of single-parent
families, our coefficient estimates are consistent with the EITC having a substantial,
positive effect on the employment of families who have used or will use welfare.

This report uses meta-analysis, a set of statistically based techniques for
combining quantitative findings from different studies, to synthesize estimates
of program effects from random assignment evaluations of welfare-to-work programs
and to explore the factors that best explain differences in the programs' performance.
The analysis is based on data extracted from the published evaluation reports
and from official sources. All the programs included in the analysis targeted
recipients of Aid to Families with Dependent Children (AFDC; now called Temporary
Assistance for Needy Families, TANF). The objective of the analysis is to establish
the principal characteristics of welfare-to-work programs that were associated
with differences in success, distinguishing between variations in the services
received, differences in the characteristics of those who participated in each
program, and variations in the socioeconomic environment in which the programs
operated.

Separate meta-analyses of both voluntary and mandatory programs were conducted.
Voluntary programs provide services (e.g., help in job search, training, and
remedial education) for those who apply for them, and they sometimes provide
financial incentives to encourage work. Mandatory programs are targeted at
recipients of government transfer payments. They also provide employment-oriented
services and sometimes provide financial work incentives, but differ from voluntary
programs by requiring participation in the services by potentially subjecting
individuals assigned to the program to fiscal sanctions (i.e., reductions in
transfer payments) if they do not cooperate.

This study uses a unique database, assembled specifically for synthesizing
findings from evaluations of welfare-to-work programs. The data used in the
study are from 27 random assignment evaluations of mandatory welfare-to-work
programs for AFDC applicants and recipients and four random assignment evaluations
of voluntary welfare-to-work programs for AFDC recipients.

Much of the analysis was devoted to determining why some programs were more
successful than others. Among the more important conclusions concerning mandatory
welfare-to-work programs that were reached are the following:

Three program features appear to be positively related to the effectiveness
of mandatory welfare-to-work interventions: increased participation in job
search, the use of time limits, and the use of sanctions. The sanction impact
is only important in the first couple of years after entry into a program.

Financial incentives decrease impacts on whether AFDC is received and on
the amount of AFDC that is received, but do not improve impacts on labor market
outcomes.

The evidence is somewhat mixed over whether increases in participation in
basic education, vocational education, and work experience increase program
effectiveness. However, in general the findings do not support putting additional
resources into these activities.

It is not clear whether the effectiveness of mandatory welfare-to-work programs
has improved over time.

Mandatory welfare-to-work programs appear to do better in strong labor markets
than in weak ones.

Because generous state AFDC programs (represented in the analysis by the
size of the maximum AFDC payment for which a family of three is eligible) reduce
incentives to leave the welfare rolls, it was anticipated that the relationship
between AFDC generosity and program impacts on the receipt of AFDC would be
negative. However, the evidence on this relationship is mixed, varying with
the statistical procedures used to test the hypothesis.

A typical mandatory welfare-to-work program appears to have a positive effect
on all four program impact measures for five to seven years after random assignment,
although the impacts begin to decline after two or three years.

In general, mandatory welfare-to-work programs appear
to be more effective in serving relatively more disadvantaged caseloads than
more advantaged caseloads-for
example, AFDC recipients (rather than applicants), program group members without
recent employment experience (rather than program group members with recent
employment experience), and long-term (rather than short-term) participants
in AFDC. However, similar evidence of a differential impact for program group
members with and without a high school diploma is lacking. Moreover, there
is some evidence of a positive relationship between program impacts and the
average age of persons in the caseload.

The research presented in this report suggests a number of conclusions about
welfare-to-work programs. One that particularly stands out is that although there
are a few welfare-to-work programs that may be worth emulating, most such programs
by themselves are unlikely to reduce the size of welfare rolls by very much or
to improve the lives of most program group members and their children very substantially.
Thus, they must be coupled with other policies, such as earnings subsidies.

Does Head Start Improve Children's
Life Chances? Evidence from a Regression Discontinuity Design

This paper exploits a new source of variation in Head Start funding to identify
the program's effects on health and schooling. In 1965 the Office of Economic
Opportunity (OEO) provided technical assistance to the 300 poorest counties
in the U.S. to develop Head Start funding proposals. The result was a large
and lasting discontinuity in Head Start funding rates at the OEO cutoff for
grant-writing assistance, but no discontinuity in other forms of federal social
spending. We find evidence of a large negative discontinuity at the OEO cutoff
in mortality rates for children ages 5-9 from causes that could be affected
by Head Start, but not for other mortality causes or birth cohorts that should
not be affected by the program. We also find suggestive evidence for a positive
effect of Head Start on educational attainment in both the 1990 Census, concentrated
among those cohorts born late enough to have been exposed to the program, and
among respondents in the National Education Longitudinal Study of 1988.

Can Administrative Data on Child
Support Be Used to Improve the EITC? Evidence from Wisconsin

The Earned Income Tax Credit (EITC) is the largest cash or near-cash U.S.
antipoverty program, but a large fraction of its payments appear to go to taxpayers
who are not eligible for the credit. The most recent study of EITC noncompliance
(for tax year 1999) found that of the $31.3 billion claimed in EITC, between
$8.5 and $9.9 billion, or 27.0 to 31.7 percent of the total, exceeded the amount
to which taxpayers were eligible. Of these errors, the most common problem
was that EITC-qualifying children failed to live for at least six months with
the taxpayer claiming the child. Tax returns do not collect information on
the location of children during the year. Consequently, absent additional information,
the Internal Revenue Service (IRS) has little ability to scrutinize EITC qualifying-child
claims before the EITC is paid out.

Given this problem, the 1997 federal budget bill directed the Secretary of
the Treasury and the Secretary of Health and Human Services to use the Federal
Case Registry of child support orders (FCR) to improve the accuracy of the
child support and tax systems. The 2001 tax bill pushed this provision further,
giving the IRS authority to apply "math error procedures" to tax returns claiming
the EITC if, according to the FCR, the taxpayer is listed as owing child support
on behalf of the EITC-qualifying child. Eight years after the IRS was granted
access to the FCR, we know little about the value of this provision.

In this paper we use a unique dataset containing federal individual income
tax returns, Unemployment Insurance data, state child support data, and data
collected by hand from Wisconsin courthouses to examine EITC compliance and
participation. We find, as expected, that the recipients of child support awards
make most EITC claims. Nevertheless, a substantial number of claims are made
by adults listed as the court-ordered payor, or are made by adults not identified
in the state case registry. Simple calculations extrapolating Wisconsin's experience
to the rest of the country suggests that as much as $1.5 billion of noncompliant
EITC claims could possibly be identified, though there are several reasons
to regard this as an upper bound. The potentially erroneous claims are much
larger than the EITC that likely would have been received by the child-support
payees (recipients) had they instead made the claims.

We also find that 40 percent of child support recipients who appear entitled
to the credit may not be receiving it. An upper-bound estimate suggests that
as much as $70 million (or $1,500 per recipient) may go unclaimed in Wisconsin.
Outreach focusing on the availability of the credit and how to receive it may
be a low-cost way of augmenting the economic resources of families with child
support awards.

A Critical Review of Rural Poverty
Literature: Is There Truly a Rural Effect?

Poverty rates are highest in the most urban and most rural areas of the United
States, and are higher in nonmetropolitan than metropolitan areas. Yet, perhaps
because only one-fifth of the nation's 35 million poor people live in nonmetropolitan
areas, rural poverty has received less attention than urban poverty from both
policymakers and researchers. We provide a critical review of literature that
examines the factors affecting poverty in rural areas. We focus on studies
that explore whether there is a rural effect, i.e., whether there is something
about rural places above and beyond demographic characteristics and local economic
context that makes poverty more likely in those places. We identify methodological
concerns (such as endogenous membership and omitted variables) that may limit
the validity of conclusions from existing studies that there is a rural effect.
We conclude with suggestions for research that would address these concerns
and explore the processes and institutions in urban and rural areas that determine
poverty, outcomes, and policy impacts.

Mexican Immigration and Self-Selection:
New Evidence from the 2000 Mexican Census

We use data from the 2000 Mexican Census to examine how the educational and
socioeconomic status of Mexican immigrants to the United States compares to
that of nonmigrants in Mexico. Our primary conclusion is that migrants tend
to be less educated than non-migrants. This finding is consistent with the
idea that the return to education is higher in Mexico than in the United States,
and thus the wage gain to migrating is proportionately smaller for higher-educated
Mexicans than it is for lower-educated Mexicans. We also find that the degree
of negative selection of migrants is stronger in Mexican counties that have
a higher return to education.

Can We Improve Job Retention and Advancement among Low-Income Working Parents?

In this paper we review the evidence on four approaches to improving job retention
and advancement among low-income working adults: (1) financial incentives and
supports; (2) case management and service provision, often by labor market
intermediaries; (3) skill development strategies; and (4) employer-focused
efforts, such as sectoral strategies and career ladder development at private
firms. Within each category, we find at least some evidence of positive effects
on retention or advancement. Among the most promising approaches are the use
of labor market intermediaries for job placements, the use of community colleges
for training, and a variety of efforts that involve local employers. Mixed
strategies that combine strong financial incentives and supports with labor
market services and training also show promise.

Welfare-Induced Migration at State Borders: New Evidence from Micro-Data

This paper extends and synthesizes the various approaches used in the recent
welfare migration literature to both offer the most comprehensive set of tests
to date for welfare migration and to determine the relative importance of short-distance
moves in welfare migration flows. The current study follows on the finding
of McKinnish (2005) of welfare migration effects obtained by comparing welfare
participation at state borders to state interiors. This identification strategy
is extended to micro-data from the 1980 and 1990 Decennial Censuses and combined
with the demographic comparisons used elsewhere in the welfare migration literature.
While there are some exceptions, the results are largely consistent with the
presence of welfare migration effects and the substantial importance of short-distance
moves in welfare-induced migration flows.

Understanding the consequences of growing up poor for a child's well-being
is an important research question, but one that is difficult to answer due
to the potential endogeneity of family income. Past estimates of the effect
of family income on child development have often been plagued by omitted variable
bias and measurement error. In this paper, we use a fixed effect instrumental
variables strategy to estimate the causal effect of income on children's math
and reading achievement. Our primary source of identification comes from the
large, non-linear changes in the Earned Income Tax Credit (EITC) over the last
two decades. The largest of these changes increased family income by as much
as 20 percent, or approximately $2,100. Using a panel of over 6,000 children
matched to their mothers from National Longitudinal Survey of Youth datasets
allows us to address problems associated with unobserved heterogeneity and
endogenous transitory income shocks as well as measurement error in income.
Our baseline estimates imply that a $1,000 increase in income raises math test
scores by 2.1 percent and reading test scores by 3.6 percent of a standard
deviation. The results are even stronger when looking at children from disadvantaged
families who are affected most by the large changes in the EITC, and are robust
to a variety of alternative specifications.

This paper examines the relationship between job sprawl and the spatial mismatch
between blacks and jobs. Using data from a variety of sources including the
U.S. Census and the ZIP Code Business Patterns of the U.S. Department of Commerce,
I control extensively for metropolitan area characteristics and other factors.
In addition, I use metropolitan area physical geography characteristics as
instruments for job sprawl to address the problem of simultaneity bias. I find
a significant and positive effect of job sprawl on mismatch conditions faced
by blacks that remains evident across a variety of model specifications. This
effect is particularly important in the Midwest and West, and in metropolitan
areas where blacks' share of the population is not large and where blacks' population
growth rate is relatively low. The results also indicate that the measure of
mismatch used in this analysis is highly correlated across metropolitan areas,
with blacks' employment outcomes in the expected direction.

The Effects of an Employer Subsidy on Employment Outcomes: A Study of the Work Opportunity and Welfare-to-Work Tax Credits

Recent changes in American public assistance programs have emphasized the
role of work. Employer subsidies such as the Work Opportunity Tax Credit (WOTC)
and the Welfare-to-Work Tax Credit (WtW) are designed to encourage employment
by reimbursing employers for a portion of wages paid to certain welfare and
food stamp recipients, among other groups. In this paper I develop a simple
dynamic search model of employment subsidies and then test the model's implications
for the employment outcomes of WOTC- and WtW-subsidized workers. My model predicts
that subsidized workers will have higher rates of employment and higher wages
than equally productive unsubsidized workers, and it highlights some possible
effects of the subsidy on job tenure. I test these predictions using a unique
administrative data set from the state of Wisconsin. These data provide information
on demographic characteristics, employment histories, and WOTC and WtW participation
for all welfare and food stamp recipients in the state for the years 1998-2001.
My ability to precisely identify the workers who are subsidized allows me to
distinguish the effects of program participation from those of eligibility.
I estimate the employment, wage, and job tenure effects of the WOTC and WtW
using propensity score matching estimation, which allows me to control for
selection into the programs while maintaining fewer functional form assumptions
than typical methods. I find that the WOTC and WtW have limited effects on
the labor market outcomes of the disadvantaged population. While the programs
may modestly increase employment and wages in the short run, these gains do
not persist over time.

Since the mid-1990s the state of Wisconsin has operated a voluntary paternity
acknowledgment process, which allows the fathers of nonmarital children born
in the state to voluntarily acknowledge their paternity by signing a notarized
form, instead of going through a judicial hearing. The premise behind this
program is that by reducing obstacles to establishing paternity the state can
encourage unmarried fathers to increase their financial and nonfinancial participation
in their children's lives. This report examines the relationship between the
use of paternity acknowledgment by fathers and two measures of their subsequent
participation in the responsibilities of child-rearing: paying child support
and having the children live with them (as shown by placement decisions).

Examining differences in child support and placement outcomes between cases
in which paternity was voluntarily acknowledged and cases in which paternity
was adjudicated is complicated by the fact that the two groups of fathers are
different in other relevant ways. Without controlling for other differences,
we found that adjudicated fathers actually paid $150 more per year in child
support than did voluntarily acknowledged fathers, but this finding did not
take into account the fact that a much lower percentage of voluntary paternity
cases have a child support order (due in part to the higher likelihood that
voluntary paternity fathers are living with the mother). When we limit our
analysis to fathers who have orders, the voluntary paternity fathers are 10
percentage points more likely to pay, and they pay about $250 more per year
than do adjudicated fathers.

Differences in the likelihood of having an order are not the only distinctions
between voluntary and adjudicated cases that require consideration. Children
with voluntary paternity acknowledgment are more likely to be an only child
and to live outside Milwaukee than are children who have adjudicated paternity.
Acknowledged children are younger at the time when paternity is established
and younger at the time the child support petition is filed. They have parents
with higher earnings, and their parents are less likely to have spent time
on public assistance. Adjudicated paternity children appear more often to have
black parents and parents who were not living together at the birth of the
child, whereas children with voluntary paternity acknowledgment are more likely
to have white parents and parents who lived together at birth or at the time
of paternity establishment.

We used multivariate models to control for differences in these background
characteristics. With the controls, voluntary paternity acknowledgment cases,
as compared to adjudicated cases, are associated with a lower incidence of
child support orders, higher likelihood of payment when an order exists, no
significant difference in the level of payment when any is paid, and a greater
likelihood of shared child placement. Cases at the average in all other characteristics
have a 77 percent probability of paying child support if paternity was adjudicated
and an 82 percent probability of paying child support if paternity was voluntary.

The Changing Association between
Prenatal Participation in WIC and Birth Outcomes in New York City

We analyze the relationship between prenatal WIC participation and birth outcomes
in New York City from 1988 to 2001. The analysis is unique for several reasons.
First, we have information on over 800,000 births to women on Medicaid, the
largest sample ever used to analyze prenatal participation in WIC. Second,
we focus on measures of fetal growth distinct from preterm birth, since there
is little clinical support for a link between nutritional supplementation and
premature delivery. Third, we restrict the primary analysis to women on Medicaid
who have no previous live births and who initiate prenatal care within the
first four months of pregnancy. Our goal is to lessen heterogeneity between
WIC and non-WIC participants by limiting the sample to highly motivated women
who have no experience with WIC from a previous pregnancy. Fourth, we analyze
a large subsample of twin deliveries. Multifetal pregnancies increase the risk
of anemia and fetal growth retardation and thus may benefit more than singletons
from nutritional supplementation. We find no relationship between prenatal
WIC participation and measures of fetal growth among singletons. We find a
modest pattern of association between WIC and fetal growth among U.S.-born
black twins. Our findings suggest that prenatal participation in WIC has had
a minimal effect on adverse birth outcomes in New York City.

Multiple-Partner Fertility: Incidence and Implications for Child Support Policy

Multiple-partner fertility might not be a significant policy issue if the
number of children affected was fairly small. However, we show here that family
complexity resulting from multiple-partner fertility is quite common, and has
important implications for understanding child support outcomes and for designing
and evaluating welfare and family policy. Using a unique set of merged administrative
data, this paper provides the first comprehensive documentation of levels of
family complexity among a broad sample of welfare recipients. We examine the
extent to which complexity is associated with systematically different child
support outcomes and outline the implications of family complexity for policy.

Macroeconomic Performance and Poverty in the 1980s and 1990s: A State-Level Analysis

We examine the effect of macroeconomic performance on poverty in the United
States during the 1980s and 1990s. Our study advances research on this issue
in a variety of ways: we utilize variation across the states rather than relying
on over-time trends for the country as a whole; we analyze cross-state variation
in both levels and change over time; we disentangle the impact of three different
aspects of macroeconomic performance: economic output (per capita gross state
product), employment, and unemployment; we investigate causal mechanisms more
carefully than is often the case in poverty analyses, focusing on work hours
and wages; we consider both absolute and relative poverty; we base our poverty
measure on pretax-pretransfer income; we use a poverty measure that incorporates
both the poverty rate and the poverty gap; and we focus on the working-age
population. Our findings highlight the importance of employment for poverty
reduction. Employment contributed to lower absolute and relative poverty by
boosting hours worked and wages in low-income households. Per capita gross
state product similarly contributed to lower absolute poverty by increasing
hours worked and low-end wage levels, but it had very little impact on relative
poverty because it also was associated with increased wage inequality. Unemployment
had little or no effect on poverty.

Child Support in the United States: An Uncertain and Irregular Income Source?

In all developed countries, single-parent families are particularly vulnerable
to poverty. In contrast to many European countries that provide some guaranteed
income support for children, the United States has emphasized private responsibility,
increasingly requiring child support from the other parent. The reliance on
a private approach raises several questions concerning the adequacy and distribution
of child support. Using detailed administrative records for virtually all mothers
with new child support orders in one U.S. state in 2000, we analyze child support
receipts over the subsequent three years. We find that most mothers with child
support orders receive support, and many receive substantial amounts. However,
the amount received varies substantially from year to year. Moreover, we find
substantial instability within years—a characteristic of private support that
has been difficult to measure with prior data. Our analysis of child support
outcomes across the income distribution shows remarkably similar proportions
of families receiving at least some support. Considering amounts received over
the distribution of pre-child-support income, we find a U-shaped pattern, with
amounts declining slightly with income over the first three deciles, and then
increasing steadily. Lower-income families are also less likely to receive
regular child support. Nonetheless, child support plays an important role in
the income packages of many low-income families, reducing pre-child-support
poverty rates by 16 percent and closing the poverty gap by an average of 44
percent in 2001.

There is surprisingly limited information on how much individuals know about
the policy rules that could affect them, either in general or in evaluations
of new programs. In this article we examine the level of knowledge that participants
in a Wisconsin child support and welfare demonstration had about child support
policy rules. We find very low levels of knowledge. Our results suggest that
people tend to learn policy rules by experience; we find less consistent support
for knowledge being primarily imparted through interactions with caseworkers.
Implications of the lack of participants' knowledge for policy evaluations
are discussed.

An Age-Period-Cohort Analysis of the Rise in the Prevalence of the U.S. Population Overweight and/or Obeses

Using data from the National Health Interview Survey for years spanning 1976
to 2001, this paper presents an age-period-cohort analysis of weight gain throughout
the life cycle. We find that while all ages experienced an increase in the
proportion overweight and/or obese (PO&O), the PO&O of young adults has grown
at a faster rate than that of older age groups. We find that the increases
in Body Mass Index are primarily due to period effects, not cohort or age effects.
From the ordered logistical regression analyses, we find that protective influence
of factors such as education, income, and age on an individual's Body Mass
Index have decreased over time. The analyses suggest that the increase in PO&O
is a phenomenon that all demographic groups in the United States have experienced.

The Effects of Welfare-to-Work Program Activities on Labor Market Outcomes

Studies examining the effectiveness of welfare-to-work programs present findings
that are mixed and sometimes at odds, in part due to research design, data,
and methodological limitations of the studies. We aim to substantially improve
on past approaches to estimate program effectiveness by using administrative
data on welfare recipients in Missouri and North Carolina to obtain separate
estimates of the effects of participating in sub-programs of each state's welfare-to-work
program. Using data on all women who entered welfare between the second quarter
of 1997 and fourth quarter of 1999 in these states, we follow recipients for
sixteen quarters and model their quarterly earnings as a function of demographic
characteristics, prior welfare and work experience, the specific types of welfare-to-work
programs in which they participate, and time since participation. We focus
primarily on three types of subprograms-assessment, job readiness and job search
assistance, and more intensive programs designed to augment human capital skills-and
use a variety of methods that allow us to compare how common assumptions influence
results. In general, we find that the impacts of program participation are
negative in the quarters immediately following participation but improve over
time, in most cases turning positive in the second year after participation.
The results also show that more intensive training is associated with greater
initial earnings losses but also greater earnings gains in the long run.

Taking a Couples Rather than an Individual Approach to Employment Assistance

In contrast to the standard individualistic approach to employment services delivery, we present evaluation results for an employment program in which both partners in a couple relationship simultaneously participate. We find that participating mothers had larger gains in employment and earnings and decreases in TANF receipt immediately upon program exit relative to mothers who participated as individuals. These gains eroded in the two years following program completion. Fathers show similar though weaker results. We suggest directions for future couples-oriented employment programs based on couples interventions in other fields and encourage program developers to consider the range of mechanisms associated with a focus on couples, including potential unintended consequences.

A Cautionary Tale: Using Propensity Scores To Estimate the Effect of Food Stamps on Food Insecurity

We use propensity scores to evaluate the effect of Food Stamps on food insecurity, a measure of inadequate food supply. Data come from the Early Childhood Longitudinal Study-Kindergarten Cohort. Propensity scores offer an advantage over traditional linear regression methods because they address omitted variable bias associated with Food Stamp use by matching similarly situated treatment and control group members, and estimating mean differences within these matched groups. We find that the program does not decrease the probability of being food insecure, but it may lessen the severity of the problem. We also note that propensity scores rest on several stringent assumptions and should be employed with caution.

The Political Roots of
Disability Claims: How State Environments and Policies Shape Citizen Demands

Who gets what from government is partly determined by who applies for government
programs. Despite the importance of the claiming process, political scientists
have said little about the factors that influence citizen demands on government
programs. We test the hypothesis that state environments systematically shape
aggregate rates of welfare demand making by testing a model of welfare claiming
in the Social Security Disability Insurance and the Supplemental Security Income
programs. Our findings show that in addition to economic need for benefits,
the density of civil society organizations, the political ideology of state
officials, and the generosity of state-run public assistance programs shape
the amount and direction of citizen demands on the welfare system. Although
commonalities exist in which variables explain welfare claiming, relationships
vary in interesting ways across programs and stages of the claiming process,
highlighting the need for a theoretical model of claiming behavior that takes
into account such differences.